Gold Price Forecast: XAU/USD gains some ground on risk aversion at the end of the week

• The XAU/USD pair has rallied towards $1,890, although it is still on the verge of posting a weekly decline.
• Chinese real estate giant Evergrande filed for bankruptcy protection in a US court.
• Falling US yields amid risk aversion benefits gold prices.

At the end of the week, the XAU/USD it rallied slightly to $1,890 but is still on the verge of posting a 1% weekly decline, its fourth consecutive weekly loss. The metal seems to be consolidating losses after seeing red numbers in the previous four sessions and also received a boost due to risk aversion fueled by market concerns about the health of the Chinese economy.

In this sense, a bitter environment spread in the markets due to the fact that a Chinese real estate giant, Evergrande, requested bankruptcy protection before a US court. It should be remembered that the same giant had defaulted on huge debts in 2021, which shocked financial markets, so the yellow metal could benefit in the coming sessions as investors could take refuge in it.

On the other hand, what explains the fall in XAU/USD is that US Treasury yields, often seen as the opportunity cost of holding Gold, rose sharply, mainly due to the hawkish stance seen by the Federal Open Market Committee (FOMC) in the minutes of Wednesday’s July meeting, which saw participants leave the door open for another hike. To end the week, US rates are moving lower as investors may be taking refuge in bonds, allowing metals to gain traction.

XAU/USD Levels to Watch

Technical analysis on the daily chart suggests a neutral to bearish stance for XAU/USD as the bulls are working on a rally but are still in negative territory. Sloping upwards below its midline, the RSI suggests a possible increase in buying pressure, while the MACD shows neutral red bars. Furthermore, the pair is below the 20,100 and 200-day SMAs, implying that bears are in control on a larger scale, while buyers urge to improve.

Support levels: $1,870, $1,850, $1,830.

Resistance levels: $1,900, $1,906 (200-day SMA), $1,930.

XAU/USD Daily Chart